Filters
Question type
Study Flashcards

Royalz Inc. is an automobile company that requires a lot of raw material to manufacture its cars. Royalz Inc. buys these raw materials from other companies that sell car parts as products. From which of the following does Royalz Inc. source its inputs?


A) Producers
B) Customers
C) Suppliers
D) Employees

E) All of the above
F) A) and C)

Correct Answer

verifed

verified

C

The board of directors of August Inc., a company that provides legal services, has been debating over whether to provide its 99 full-time employees with health insurance. The managers of the firm, however, are considering dropping employee health insurance as a benefit. Which of the following statements strengthens the managers' consideration?


A) The fine that August Inc. would face would be cheaper than the current premiums for health insurance.
B) The Affordable Health Care Act requires firms with over 50 employees to provide health insurance for their workers, or face fines.
C) The federal Affordable Health Care Act, enacted in 2009, mandates that health insurers cover even those with preexisting conditions.
D) The revised policy would help August Inc. erect entry barriers in its industry and change the nature of rivalry in the industry with most of the small firms.

E) All of the above
F) None of the above

Correct Answer

verifed

verified

WillowWorks LLC, a retail clothing store, has been sourcing its raw materials from a supplier named ThreadTym Corp. for the last five years. A change of management at ThreadTym resulted in an increase of the prices of the raw materials. As a result, WillowWorks purchases ThreadTym so that it can produce these products on its own. This scenario best illustrates ________.


A) network effect
B) forward integration
C) backward integration
D) switching cost

E) All of the above
F) None of the above

Correct Answer

verifed

verified

A popular food company, Crunchez Corp., is finding it difficult to retain its buyers as another food company, MidnightSnax Inc., has started to provide the same product with the same taste for a lesser price. Which of the following is a threat to Crunchez Corp.?


A) Cost push inflation
B) Supplier power
C) Switching cost
D) Unused production capacity

E) All of the above
F) A) and C)

Correct Answer

verifed

verified

A federal act was passed in the country of Arahonia which changed the way many of the Arahonian industries worked. Most of the firms in Arahonia had to restructure their strategic plans accordingly. This resulted in the larger firms acquiring the smaller ones which did not exit the market altogether. This scenario best illustrates a(n) ________.


A) technology change
B) regulatory force
C) economic change
D) cultural force

E) None of the above
F) A) and B)

Correct Answer

verifed

verified

Zenith Corp., a bag company, produced a lot of high-end leather bags than could be sold in the market for a year. The leather bags eventually wore out and were not fit to be sold, thus causing huge losses for that year. Which of the following did Zenith Corp. most probably experience during that year?


A) Use of full production capacity
B) Unused production capacity
C) High exit barriers
D) Special sales incentives

E) B) and D)
F) None of the above

Correct Answer

verifed

verified

Leo Corp., an automobile company, experienced an increase in growth rate this year as the company sold its products at a lesser rate due to the economic conditions that the industry recently went through. This has helped the company to attain more investments than before and consequently to invest in new assets, research and development, and new product development. Which of the following macroeconomic forces does this scenario best illustrate?


A) Currency exchange rate
B) Economic growth
C) Inflation
D) Interest rate

E) A) and B)
F) B) and D)

Correct Answer

verifed

verified

Identify a true statement about switching costs.


A) The lower the switching costs, the easier it is for competitors to poach customers.
B) The higher the switching costs, the easier it is to convince customers to switch brands.
C) It is the loss in profit incurred by a firm for every buyer who switches to another brand.
D) It is the cost a firm has to pay to each buyer who switches to another brand for superior quality.

E) A) and D)
F) C) and D)

Correct Answer

verifed

verified

Which of the following statements best describes forward integration?


A) A firm purchases its suppliers in order to make a product itself rather than buying it from another firm.
B) A firm imposes extra costs on customers for changing brands.
C) A firm goes into the business of its former buyers, rather than continuing to sell products to them.
D) A firm joins an alliance with its competitor to share materials.

E) B) and C)
F) B) and D)

Correct Answer

verifed

verified

Which of the following statements is true of a fragmented industry?


A) It is characterized by rivalry that is typically less intense.
B) It usually has very few competitors and tends to be dominated by a few large firms.
C) It is difficult to keep track of the pricing and competitive moves of multiple players.
D) It involves companies selling the same brand of products that are scattered in different locations.

E) A) and B)
F) B) and C)

Correct Answer

verifed

verified

_________ can be most accurately defined as conditions in the competitive environment that endanger the profitability of a firm.


A) Integrations
B) Weaknesses
C) Threats
D) Rivalries

E) All of the above
F) C) and D)

Correct Answer

verifed

verified

The management of GNH Corp., a chemical plant in the city of Werkshore, has promised to take care of its surroundings. It assured to dispose its factory wastes in a way that does not affect the habitat. In order to do so, the company had to go through renovations that allow the plant to take up green initiatives. Which of the following is the source of change for GNH Corp.?


A) Complementary services
B) Global forces
C) Regulatory forces
D) Natural environment

E) A) and B)
F) A) and C)

Correct Answer

verifed

verified

Identify a true statement about understanding the five forces that shape industry competition.


A) It helps to perceive wider competitive threats and be better prepared to address them.
B) It helps firms have a product-oriented view in defining their industry.
C) It helps a company strategist predict the industry a competitor might enter and hence avoid that industry.
D) It helps a company strategist understand that the five forces are rigid and hence plan the business strategy accordingly.

E) A) and D)
F) None of the above

Correct Answer

verifed

verified

How is buying power related to switching costs?

Correct Answer

Answered by ExamLex AI

Answered by ExamLex AI

Buying power and switching costs are two...

View Answer

Which of the following statements is true about customer needs?


A) Companies that meet the need for communication by manufacturing mobile handsets or mobile ham radios are considered part of the same industry.
B) Understanding them can be very helpful in defining the boundaries of an industry.
C) They should be addressed only when many customers have similar needs that require attention.
D) Two firms cannot be considered part of the same industry even if their products do the same job for customers.

E) A) and B)
F) A) and C)

Correct Answer

verifed

verified

B

CoolDrink Inc., a beverage company, had to change its medical insurance policies because of a new federal law. The new law required all companies with over 50 full-time employees to provide health insurance for their employees. In case these companies are unable to do so, they would have to face penalty. CoolDrink Inc. had to implement changes due to ________.


A) global forces
B) regulatory forces
C) demographic forces
D) natural forces

E) B) and D)
F) A) and B)

Correct Answer

verifed

verified

Which of the following statements is true about rivalry?


A) It is an expensive method that treats other companies amicably.
B) It helps increase losses for an organization to a large extent.
C) It is a force that is best avoided in an industry to increase profits.
D) It is an important driving force to increase profitability.

E) A) and D)
F) B) and C)

Correct Answer

verifed

verified

Hercules Inc. is a high performing steel manufacturing company. Chang, a stakeholder of the company, believes that it is important to protect the company from threats. Hercules Inc. has often struggled to overcome rivalry and product substitutes. Chang claims that if the company constantly keeps a check on itself by creating power over buyers, paying heed to customers' requests, and strengthening its resources and manpower, the company can maintain competitive advantage. Which of the following statements strengthens Chang's claim?


A) The employees feel that a change in functions will also cause a change in benefits that they currently are enjoying, such as flexible hours.
B) The company has overcome much rivalry just as the way it is currently functioning and need not change its method.
C) The other members of the management feel that the company would require sufficient funds to create this change in functioning.
D) The company can face first-time conflicts if it is not well prepared with a sound method to retain competitive advantage.

E) C) and D)
F) None of the above

Correct Answer

verifed

verified

The companies LaceThings Inc. and BellePrints Corp. sell the same product. They constantly try to outdo each other in terms of resources, price, and customer satisfaction. The companies try to outperform each other in order to gain customer loyalty and generate more sales. This scenario is an example of ________.


A) integration
B) partnership
C) rivalry
D) switching

E) A) and D)
F) All of the above

Correct Answer

verifed

verified

Mention the general environmental factors that can affect the profit potential of a firm. Briefly explain the factors of technological change and social/cultural forces.

Correct Answer

Answered by ExamLex AI

Answered by ExamLex AI

The profit potential of a firm can be influenced by a variety of environmental factors, which can be broadly categorized into several areas: economic, political/legal, technological, social/cultural, and ecological. Each of these factors can have a direct or indirect impact on a company's operations, costs, revenue, and overall profitability. Below, I will briefly explain the factors of technological change and social/cultural forces after listing the general environmental factors. General Environmental Factors Affecting Profit Potential: 1. Economic Forces: These include factors such as inflation rates, interest rates, economic growth, unemployment levels, and currency exchange rates. Economic conditions can affect consumer purchasing power and spending patterns, which in turn can impact a firm's sales and profitability. 2. Political/Legal Forces: Government policies, regulations, tax laws, trade restrictions, and political stability can influence a firm's ability to operate and compete. Changes in these areas can affect costs, access to markets, and the overall business climate. 3. Technological Change: Technological advancements can lead to new products, processes, or services, and can significantly alter the competitive landscape. Firms that are able to adopt and leverage new technologies may gain a competitive advantage, while those that fail to adapt may fall behind. Technological change can also lead to cost savings through improved efficiency or open up new markets by enabling innovative business models. 4. Social/Cultural Forces: These encompass the values, beliefs, attitudes, and demographic trends of the society in which a firm operates. Changes in social trends can affect consumer behavior and preferences, leading to shifts in demand for certain products or services. Firms need to be aware of these changes to effectively target their offerings and marketing strategies. 5. Ecological/Environmental Forces: Environmental concerns such as climate change, resource depletion, and sustainability can influence consumer behavior and regulatory requirements. Companies may face pressure to adopt environmentally friendly practices, which can affect costs but also provide opportunities for differentiation and innovation. Technological Change: Technological change is one of the most significant drivers of competitive advantage and can dramatically affect a firm's profit potential. It encompasses the development of new products, improvements in production processes, and the emergence of new business models facilitated by technological innovation. Companies that are early adopters of technology can streamline their operations, reduce costs, and offer new or improved products that better meet customer needs. However, technological change can also render existing products or services obsolete, posing a risk to firms that are unable to adapt quickly. Social/Cultural Forces: Social and cultural forces relate to the shared beliefs, values, norms, and practices of a population. These forces can shape consumer behavior and influence the types of products and services that are in demand. For example, an increasing focus on health and wellness in many societies has led to a surge in demand for organic foods, fitness equipment, and wellness services. Similarly, demographic shifts such as an aging population or increasing cultural diversity can create opportunities for firms that tailor their offerings to these changing markets. Companies need to be attuned to social and cultural trends to remain relevant and maintain their profit potential in the face of shifting consumer preferences.

Showing 1 - 20 of 65

Related Exams

Exam 1

What Is Business Strategy

65 Questions

Exam 3

Internal Analysis: Strengths, Weaknesses and Competitive Advantage

65 Questions

Exam 4

Cost Advantage

80 Questions

Exam 5

Differentiation Advantage

65 Questions

Exam 6

Corporate Strategy

65 Questions

Exam 7

Vertical Integration and Outsourcing

65 Questions

Exam 8

Strategic Alliances

65 Questions

Exam 9

International Strategy

65 Questions

Exam 10

Innovative Strategies That Change the Nature of Competition

65 Questions

Exam 11

Competitive Strategy

65 Questions

Exam 12

Implementing Strategy

65 Questions

Exam 13

Corporate Governance and Ethics

65 Questions

Exam 14

Strategy and Society

65 Questions

Show Answer